GILLINGHAM, England & TROY, Mich. – Delphi Automotive has reported third quarter 2012 revenues of $3.7 billion, a decrease of 6.8 percent from the prior year period, the result of further reductions in European production and a significant weakening of the euro and Brazilian real.
Adjusted for the impacts of currency exchange, commodity movements and divestitures, revenue was flat in the third quarter. The company reported third quarter net income of $269 million and diluted earnings per share of 84 cents, compared to $266 million and 79 cents per diluted share in the prior year period.
“Delphi’s third quarter earnings growth demonstrates the benefits of our lean and flexible cost structure in the face of a difficult macroeconomic environment, particularly in Europe where vehicle production levels have weakened further," said Rodney O’Neal, CEO and president.
For the nine month period ended Sept. 30, 2012, the company reported revenue of $11.8 billion, an increase of 1.9 percent over the first nine months of 2011, adjusting for currency exchange, commodity movements and divestitures. The increase in adjusted revenue reflects growth of 11 percent in Asia and 6 percent in North America, partially offset by a 2 percent decline in Europe and a 10 percent decline in South America.
For the 2012 year-to-date period, net income totaled $941 million, or $2.89 per diluted share, which includes a 13 cent impact from the increased expense of the variable 2010 Long-Term Incentive Plan, compared to net income of $855 million, or $1.89 per diluted share, in the prior year period.
In the first nine months of 2012, the company generated net cash flow from operating activities of $1.168 million, as compared to $909 million in the prior year period. Cash flow before financing totaled $642 million compared to $534 million in the prior year period.
As of September 30, 2012, the company had cash and cash equivalents of $1.6 billion and access to $1.3 billion in undrawn committed revolving bank facilities, providing the Company with $2.9 billion of total liquidity. Total debt outstanding as of September 30, 2012 was $2.1 billion.
During the third quarter of 2012, the board of directors authorized a share repurchase program of up to $750 million of ordinary shares. This program follows the completion in the third quarter of 2012 of $300 million of share repurchases under the company’s previously announced share repurchase program that commenced in January 2012. During the three and nine months ended Sept. 30, 2012, Delphi repurchased 5.44 million and 10.74 million shares at an average price of $29.78 and $29.08, which totaled approximately $162 million and $312 million, respectively, leaving approximately $738 million available under the $750 million repurchase program. These share repurchases are in addition to approximately $180 million of ownership interest repurchases in the third quarter of 2011. All repurchased shares were retired, and are reflected as a reduction of ordinary share capital for the par value of the shares, with the excess applied as reductions to additional paid-in capital and retained earnings.
Delphi also recently completed the acquisition of FCI Group’s Motorized Vehicles Division (MVL) on Oct. 26, 2012 for €765 million. MVL is a leading global manufacturer of automotive connection systems with a focus on high-value, leading technology applications. The acquisition was funded with cash on hand inclusive of additional borrowings of $363 million.
In order to improve the company’s cost structure and margins and in response to the continued economic uncertainties, Delphi initiated various restructuring programs in the fourth quarter. The programs are anticipated to total approximately $250 million ($70 million related to MVL), with approximately $175 million anticipated to be recognized in the fourth quarter of 2012, and the balance to be recognized in 2013. Approximately 75 percent of the restructuring program costs are in Europe.
The company’s fourth quarter 2012 and full year financial guidance reflects our current outlook on exchange rates, which negatively impacts year over year comparisons, further reductions in European OEM production schedules, and the acquisition of MVL, excluding non-recurring MVL transaction costs and the fourth quarter restructuring program. The company’s updated fourth quarter and full year financial guidance reflects an estimated average exchange rate of $1.29 per euro for the fourth quarter and $1.28 per euro for the full year, as compared to the average exchange rate for fourth quarter of 2011 and full year 2011 of $1.35 per euro and $1.39 per euro, respectively.
